Area Development
Predicting the business future of most industries has been nearly impossible for the past few years, and the recession has made any hazy image in the crystal ball downright scary. For those in the pharmaceutical, biotech, and medical equipment industries, the long debate over health care reform has complicated business conjecture.

Now that the downturn is receding and health care reform has been passed and signed, these industries can feel more secure about the future.

Health Care Reform
As tea partiers and other opponents talk of overturning health care reform, the biotechnology sector basks in the reform's possibilities. The legislation "includes the incentives necessary to attract the massive investment required to speed the discovery and development of the next generation of breakthrough therapies and potential cures for the world's most debilitating diseases," said Jim Greenwood, president and CEO of the Biotechnology Industry Organization, which hailed health care reform in March. "The bill also includes a critical provision that will provide some financial relief to research-intensive, small biotechnology companies that continue to suffer from tight credit markets." That's a far cry from what industry insiders said a year ago. Credit and capital were so tight then that some companies seemed in jeopardy. Venture capital investments were down by more than 40 percent, and companies watched their cash on hand dwindle. But fundraising picked up in late 2009, and in 2010 the health care sector saw some $18 billion in new public equity and $49 billion in new public debt, according to Capital IQ.

Now, backers like Greenwood look forward to the help promised by the Therapeutic Discovery Project Tax Credit, a health reform component. By supporting research and development, Greenwood predicts the measure will save or create thousands of jobs nationwide. "The provision will help these companies continue their groundbreaking research that likely will lead to new therapies to treat patients living with chronic or acute diseases and help reduce long-term health care costs," he said.

Research and Development
Despite the recession, pharmaceutical companies spent on research and development, according to the Pharmaceutical Research and Manufacturers of America (PhRMA). Industry-wide research and investment, which totaled $63.2 billion in 2007, grew to more than $65 billion in 2008 and 2009.

Members of PhRMA spend about three-quarters of their research dollars in the United States. Most of the rest is spent in the United Kingdom, Japan, Canada, Germany, France, and other Western European nations. "Today there are more than 2,900 medicines in the development pipeline," wrote PhRMA president and CEO Billy Tauzin in its industry profile.

The medical device field also has a bright future. Medical device consultant Emergo Group surveyed industry insiders late last year and found that 72 percent expected their companies to see increased sales in 2010. However, only about half believed they would significantly hire this year. Like other industries, the device sector is taking a wait-and-see approach as corporate leaders wait for solid signs of recovery to begin hiring. Smaller companies are more likely to hire in 2010.

An American Society for Quality survey also reported positive feedback from medical device manufacturers. Some 57 percent said they will grow more in 2010 than in 2009. The hottest opportunities are expected in neurological, cardiovascular, and orthopedic advances. Respondents were also eager for nanotechnology, health care IT advances, minimally invasive surgery, and new combination devices that incorporate drugs and biologics.

Lively Life Sciences Clusters
Nearly every state chases biotech and pharmaceutical investments, and why not? The life sciences promise high-paying jobs and growth potential. Even with health care reform's uncertainties, big spending on health innovations is expected. Disregarding the downturn, the life sciences have been growing across the country.

• North Carolina has led the life sciences since it created the North Carolina Biotechnology Center in 1984. The state's biotech sector employs more than 50,000 people, and the state seeks to employ 125,000 biotech workers by 2023. The industry has grown faster in North Carolina than the national average, and the state's biotech sector has grown five times faster than private sector businesses. To keep up, the North Carolina Biotechnology Center launched a $10.4 million expansion last year.

• Massachusetts also invested in biotech early by building resources in the mid-1980s to support the growth of biotechnology and the life sciences. They include the Massachusetts Biotechnology Council and Massachusetts Biomedical Initiatives. The latter has launched more than 50 companies. In 2008, the state launched a billion-dollar biotechnology science stimulus plan that included an investment fund and millions of dollars in tax incentives.

• Everything is big in California, especially the biotechnology and pharmaceutical sectors. Biopharmaceuticals support more than half a million California jobs directly or indirectly. Northern California claims to host more life sciences companies than anywhere else, and those companies continued to grow research and development while the economy struggled, according to the 2009 Northern California Life Sciences Real Estate Survey. San Diego also hosts a biotech hub that is among the strongest U.S. magnets for the life sciences.

• New Jersey has one of the nation's largest clusters of biotech companies, numbering some 250 companies. Senator Robert Menendez supported the Therapeutic Discovery Project Tax Credit in the health care reform bill, and New Jersey's biotech firms may be among the beneficiaries. Cash-starved biotech companies say they'll be able to jumpstart research and innovation with the credit. Not all have been as fortunate as Soligenix, a New Jersey biotech startup that was able to find cash for drug development during the recession last year.

• Pittsburgh may have a long history in steel, but it also has a strong future in medical fields. Nearly 50 medical device companies have expanded or relocated in the area since 2002, including Philips Respironics and MEDRAD, two industry leaders. MEDRAD and a group of development organizations recently collaborated to attract California-based BeamOne, which is investing $9 million to launch a new electron beam medical device sterilization service center that will create 20 jobs. It's another piece of the critical mass in the region's medical device business, said Dennis Yablonsky, CEO of the Allegheny Conference on Community Development. "It supports an already strong medical device manufacturing sector by bringing required sterilization of their products closer to home."

• Oklahoma City is another up-and-coming biotech area. The University of Oklahoma Health Sciences Center and the Presbyterian Health Foundation both have headquarters in the city. Together they provide research and development assistance to more than 50 companies and agencies, including more than 700,000 square feet of lab and office space. Last year, the Oklahoma Medical Research Foundation broke ground on an eight-story research tower, a $125 million "green" project topped by 24 helix-shaped wind turbines to power its labs. And the $75 million Stephenson Life Sciences Research Center will open this year. "We have an incredible amount of growth currently happening in the biotech sector," said Jill Harrison of the Greater Oklahoma City Chamber.

• Biosciences keep growing in Ohio, according to a report from the non-profit organization BioOhio. The sector employed 55,465 in 2008, up nearly 20 percent since 2000. The study, conducted with Cleveland State University, counted some 1,253 bioscience-related firms - from new startups to widely recognized brands - operating 1,628 locations in the state.

• In Colorado, biopharmaceuticals employ roughly 14,000 people, and the state is seeking to boost that number. In 2003, public and private partners developed an action plan to grow the life sciences, and the state government and Colorado research institutions increased their investments in facilities and infrastructure in response. In 2008, Colorado launched a $26.5 million Bioscience and Life Science Fund to support research and proof-of-concept projects.

• Iowa benefits from biotechnology activities beyond health care applications, particularly biofuels. The state leads in ethanol production, with an annual capacity exceeding three billion gallons from more than 36 plants. Meanwhile, a $15 million Elevance Renewable Sciences demonstration facility is showing the world how plant oils and poultry can be transformed into jet fuel, lubricants, adhesives, cosmetics, and even candles.

• Oregon officials have found the biosciences to be worth even more than they thought. Research estimates the sector's value at $3.5 billion in direct revenues and more than 13,600 jobs. That makes it more prosperous than Oregon's agricultural sector, forestry industry, and the state's highly regarded wine business.

• Biopharmaceuticals are booming in Washington State, providing direct and indirect employment for about 67,000 people. The state supports life sciences in a variety of ways, including the Life Sciences Discovery Fund, which offers research grants and boosts economic growth. • Nearly 800 biotech, pharmaceutical, and medical device companies call Florida home. The medical device sectors, one of the nation's largest, employs some 20,000 people in the Jacksonville area, Central Florida, and South Florida. Prominent research institutes support the biotech sector, with specialties including therapeutics and diagnostics.

• Indiana continues to beef up its presence in orthopedics. In the small community of Warsaw, several companies generate a combined $11 billion in revenue and fill more than half of the industry's U.S. market share and about a third of the world's need for orthopedic medical devices. "The Warsaw orthopedics community is one of the most robust and concentrated medical equipment development sectors in the world," said David Johnson, president and CEO of BioCrossroads, an Indianapolis-based life sciences industry organization.

So what does the future hold for life sciences? Plenty of life, it seems. Biotechnology, pharmaceuticals, and medical devices haven't been immune from economic woes, layoffs, and dried-up capital markets, but industry leaders haven't lost sight of the promise of innovation.